(1) Employee related severance and other restructuring costs
As part of the acquisition of Honsel, a certain level of restructuring was planned in order to be cost competitive over the long term, in particular at the Company's German facilities in Meschede and Soest. The restructuring efforts commenced immediately after the closing of the acquisition on July 29, 2011. In connection with these restructuring activities, $28.5 million of primarily employee related severance was recognized during the year ended December 31, 2012 ($11.4 million during the year ended December 31, 2011) of which $26.0 million was recognized during the fourth quarter of 2012 and $1.7 million during the third quarter of 2012. Additional employee related severance associated with the Martinrea Honsel operations may be incurred in 2013.
In addition, during the fourth quarter of 2011, the Company began the process of closing one of its small operating facilities in Mexico. The existing business and equipment of this facility was moved to other Company facilities in Mexico including a new facility the Company opened in Silao, Mexico in 2011. Restructuring costs relating to this closure amounted to $5.0 million for the year ended December 31, 2012 ($2.4 million during the year ended December 31, 2011) of which $1.5 million was incurred in the fourth quarter of 2012 and $0.6 million in the third quarter of 2012, consisting primarily of employee related severance and the dismantling and transporting of PP&E between Company facilities. The closure of this facility was completed during the fourth quarter of 2012. As such, no further costs related to this closure are expected to be incurred.
Costs associated with other restructuring activities totaled $2.4 million during the year ended December 31, 2012 of which $0.3 million was incurred in the fourth quarter of 2012 and $1.2 million during the third quarter of 2012, relating to the right sizing of certain other manufacturing facilities.
(2) Impairment (reversal) of Property, Plant and Equipment (PP&E) and Intangible Assets
Annual impairment tests were conducted on PP&E and intangible assets at December 31, 2012 and December 31, 2011. In addition, as required by IFRS, the Company evaluated all previously recorded impairment charges for potential reversal. Based on this analysis, incremental impairment charges were recorded which were offset by the reversal of certain previously recorded impairment charges resulting in a net impairment charge of $0.4 million during the year ended December 31, 2011. The reversal of previously recorded impairment charges in 2011 under the requirements of IFRS was primarily due to the significant improvements in North American vehicle production from 2009 and the benefits from the restructuring activities conducted during 2009 and 2010 which included the relocation of plant and equipment and the corresponding customer business to cost competitive facilities.
(3) Executive separation agreement
On June 29, 2012, the Company announced that Nat Rea stepped down as Vice Chairman and Director of Martinrea, effective as of such date, to pursue other opportunities. As part of the separation agreement and based on the terms of his employment contract, the Company paid Mr. Rea $5.2 million which was expensed during the second quarter of 2012 and included in SG&A expense. The Company does not expect to incur any further costs associated with Mr. Rea's departure.
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